It seems the chart does not give any clear direction. No matter how you look at it and no matter how much you follow a system, it is random. What is a strong uptrend for one person, is a an overbought for one person. So how can this be not random?
This forex seems to me more like which gets hit first the stop or the limit. So essentially it seems to me more like gambling. And also based on the statistics, there seems to be more people losing money than gaining. So essentially it is a negative sum game where only the brokers win.
If it were truly random then no one could make money in the long term. Since people do it means their success rates are statistically signifigant and Forex is not random.
As for most people losing money, its because they don’t devise a proper system that includes money management.
I think I read on one of these forums that 90% of all traders get wiped out within their first week. This is because they try to scalp easy profits at crazy leverage ratios, don’t use stops and get wiped out by a small negative price action.
The fact that most people lose money does not make Forex random speculation, nor is it the same as gambling.
In gambling the house ALWAYS has the edge but the fact that 5% of Forex traders make money in the long term indicates that this is not necessarily true.
^ its the same why people go in the casino. They expect to win. But it does not mean that more people become successful winning in the casino that is why they do it.
In forex, you place a bet, then if you put a stop loss say 20 pip SL and 20 pip TP, it just means you are staking $20 dollars to win $20 dollars. But since you pay the spread and assuming the spread is 2 pips, you are paying $2 dollars for every bet. Which is now at the mercy of the forex market.
There are two sides of the coin, you may be betting on hoping for a reversal or betting that the trend will continue. Which is 50/50.
Forex seems to me like gambling. It is not the same as stock market where you are actually investing on a company and the company even pays dividends.
This is a question that is frequently asked by novice traders. Many people come to Forex on the hype of get rich quick schemes and scams. Yes you can in some ways liken trading to gambling on horse racing. The average punter will pick a pony based on no more than a gut feeling or cool name , then wonder why they lose. The proffessional backer will spend years studying many factors, such as, form, breedingweather conditions and tracks etc. This study may give them an edge and improve success rates. Many novice traders don’t study and then wonder why they lose, ultimately believing that trading is a gamble or scam. As with any proffession you must first learn your trade before you can hope for any success. To all novice traders who think otherwise, we thank you for your money
Forex may have many interpretation, I can even say more trader more interpretation. And yes some people think that is gambling, some of them lose, and some of them lose… exactly like in gambling there are winner-professional gambler and big loser.
Other think it is a statistal science, for others astrological questions, others numerological science… ect, there plenty interpretation, and in all of them there are people making money and losing. It is exactly like life.
The terms “strong uptrends” and “overbought conditions” infer some sort of prediction.
A chart is simply a record of [B]past[/B] prices. If you think a chart, or your system can give you any indication of [B]future[/B] prices, your results will indeed be “random”; sometimes you’ll be right and others wrong.
When looking at charts (the past) for strong uptrends and overbought conditions (the future), you effectively removes yourself from the only time you have any access to: the present moment.
An effective trading system is a set of rules designed to deal with whatever happens in this present moment.
You seem to imply that gambling is a bad thing. Some gamblers win pretty consistently.
Brokers win more the more you trade, win or lose. The answer? Trade less (and win more…)
Imo depends on perspective on the definition of gambling really, based on the commonly negatively associated term as a completely unpredictable edgeless sort of activity where you really are purely subject to luck/chance/circumstance (& ticket/cover charge) trading forex can be gambling & the house and whoever else picked up your losers as winners will win. (& Boy have I gambled with it lol) It can also be gambled where you trade based on signs that generally have a higher probability of producing certain behaviour and you control your risk & money management so that logically you have a higher probability of profitability.
I guess the turnover is relatively more uncertain than getting paid per hour but neither and nothing can really be 100% guaranteed on the large scheme of things or rather on an abstract/less practical sort of level
Nice topic to discuss for the sake of it though, Oprah has her purpose
There are 2 different meanings for “gambling”: the wanabee meaning which is throwing your money like a Monkey, or gambling in “mathematical game theory” which is about probability and risk management. More easy to say than to apply though
Keep thinking like that and you’ll be sure to join the 90% who lose.
I agree with you that forex is gambling.
Because as with any gambling, you put up a stake in hopes of winning it back and then some.
Thats the ONLY similarity.
With casino gambling you are limited by the house edge, and table limits.
In forex, you can find your own edge, and exploit it because there are no table limits except for the size of your account.
Figure out what I mean by that, and you can join the 3% who make a living.
Or even the 2% who make an absolute killing.
I also agree that most of the time, forex behaves in a brownian motion fashion. Completely random and unpredictable. Brownian Motion and the Forex Market
BUT there are bursts of volume/orders/fundamentals, which inherently produce moments of orderly chaos, which produce the same repeatable situations, over and over again. Which can clearly be taken advantage of.
As talon said, you gotta differentiate between signal and noise.
Find an edge in the brownian motion periods (if you can), and find an edge in the fractally chaotic periods, and youre well on your way.
The market is ever changing and must be adapted to in order to survive.
One method/system CANNOT be traded all the time. Certain conditions call for different tactics.
Its like a battlefield/war.
You can lay and wait for the enemy to come to you.
Or you can storm the beaches guns blazing.
Each method is neither right or wrong.
It all depends on your enemy at the time.
In some situations, laying and waiting, can get you killed,
Whereas in other situations storming the beaches can also wipeout your army.
But on the other hand, sometimes the opposite is true, and laying and waiting serves a purpose, or storming the beaches defeats the enemy.
It all depends on the enemy.
And in this case the enemy is the market.
You have to have an idea of the enemies tendencies at the particular time you are trading it.
Adaptiveness is the only thing that will keep you alive in the market.
Trading the markets is similar to gambling because once you place your “bet”, the reason you placed your bet has nothing to do with the outcome and there is nothing you can do to make the outcome favorable. One difference is in trading the whole bet does not have to be lost. Another difference is there is no fixed limit on the amount you can win.
Some events happen daily. Some weekly. And some events monthly. Those events are simple to identify and use to advantage.
roulette in casinos are random things… and some russian guys have made some kind of cell phone with a lazer that could read the velocity of the roulett and the ball… that had transform the probabilitys of the game from 1/36 to 1/6 … not 1/1 but 1/6… and they had made 9 million dollars in 7 days until they get busted
in forex you don´t need cell phone with lazer… there´re other things
Maybe a good analogy is BlackJack / 21. There are times when the odds are in favor of the house and times when the odds are in favor of the player. By counting cards you can know when it’s in your favor and increas your bet size.
Maybe it’s better to compare it to gold mining. There’s an old saying. In a gold rush it’s the hardware store owners that get rich selling picks and shovels to the miners. (that would be the brokers). So we should all go out and start a forex brockerage buisness!
I think there is a “gold nugget” of advice in this post. Even though the market is open all day and night, there are relatively few opportunities to consistently profit from. This makes sense because all the traders in the world are competing for profitable positions.
Most traders would agree that overtrading (both in size and frequency) can have the most devastating impact on your account, and in most cases will blow account after account. Being patient and extremely selective is what gives profitable traders a consistent edge over those who take trades on a whim without any discipline or forethought. This is true for many other competitive arenas and I don’t see why it wouldn’t be true for trading.
Forex definitely isn’t random (prices change as a result of simple buying and selling), but for some people it is gambling. If people don’t know what they are doing and treat it like they would any other gambling game then for them it is gambling.